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Author: VTTea Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127805  
Subject: Q: 2 mortgages, or refinance later? Date: 6/19/2005 10:00 AM
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Hi folks,

I need some input here. My wife and I are buying a house in NC, which we will closing on July 18th. We plan on putting our current condo on the market soon but don't expect to have the proceeds from that ready for closing. Once we sell our condo, however, we'll be applying it towards our new home mortgage because we won't be able to afford making payment for very long. So my question is essentially what's the best way to finance our new home purchase so that we're not paying more than we have to once we later apply the proceeds from our condo sale?

Here are the numbers:

New Home (NC): $354,000 sale price, $4,000 already paid for through deposit, so $350,000 due at closing.

Condo (DC): Expected sale is $250,000. We own it outright, so all of it will be available.

Cash downpayment: $100,000. It's a "gift" from my father, but will be repaid upon sale of condo, leaving $150,000 from condo to apply to new mortgage.

In other words, we'll be borrowing about $150,000 that we wouldn't have needed to borrow had the timing worked out a little better. So while we'd gladly pay points to reduce the interest rate since we expect to be in the new home for the long term, we don't want to pay it on the portion we intend on paying off in a matter of weeks.

I'm trying to weigh the option

(1) of getting two mortgages (100k/150k) with the same lender, versus
(2) doing a single mortgage (250k) with a lender and having them reamoritize the payments after the lump sum payment (150k), versus
(3) going with a low closing cost lender (like ING) on the 250 and refinancing with another lender later on the balance of 100.

Any thoughts, suggestions? Your input is greatly appreciated!

-Steven
Washington, DC

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